Land scarcity, high construction volume, and distinctive leases characterize Japan’s rental housing markets
he Japanese housing market is characterized by a large construction volume, rapid technological progress, fast depreciation of housing value, a thin secondary market, and low maintenance of existing properties. Legal and tax systems unintentionally encourage wealthy individuals to invest in studio apartments to rent out to young people living in urban areas. Thus, family housing is mainly available through ownership. The public sector played an important role in addressing housing shortages after World War II due to massive migration to large metropolitan areas. The public housing finance program encouraged homeownership, while public and quasi-public rental units provided shelter to low- and middle-income households. Roughly 36% of Japanese households rent their homes today. The biggest challenge is a mismatch between housing stock and demographics in a rapidly aging and shrinking society, exemplified by vacant housing units.